Inside Nationwide's &#163;1bn mega-transformation programme

Nationwide embarked on a £1bn+ transformation programme back in 2008Photo: Nationwide

Three years ago, Nationwide fired the starting gun on a £1bn+ transformation programme which would remake huge portions of its IT infrastucture. The scale of the programme can be seen in what has been achieved so far - for example, a new £150m fully virtualised datacentre which opened on time and slightly under budget last December.

Nationwide has also outsourced its networks and desktops to BT and Computacenter respectively, and integrated several regional businesses it had acquired - Cheshire, Derbyshire and Dunfermline building societies - at an operational level, including consolidating 11 regional contact centres down to three, all now based in Scotland.

It has also launched a new front-end mortgage platform based on Microsoft technologies - putting £7bn-worth of business through the new platform so far, and taking out between 35 and 40 per cent of the operating costs for the origination of mortgage lending within the group. Nationwide has the second-largest mortgage book in the UK - some 15 per cent of national mortgage balances, according to Tony Prestedge, its group development and operations director.

In the first four months of next year, the company plans to implement this platform on a multichannel basis across its branches and call centres, says Prestedge: "What we built was a fully multichannel origination and lending platform. It's live across the intermediary estate which is about 50 per cent of our business - we're now rolling it out across our branded channels. When that is live and operational it will originate circa £20bn worth of lending per year."

On the banking and savings front, Nationwide embarked on a "monolithic programme" in 2008: a back-office transformation to replace Unisys with SAP across the estate of 20 million accounts - a £400m project in its own right. This deployment is running late by more than a year and is over budget, albeit "within contingency" levels, according to Prestedge.

The project is in pilot now and Prestedge expects the platform to be live between July and December 2012, with current and savings accounts set to be migrated throughout 2013.

Part of the reason for the project's delay has been the need to respond to regulatory changes triggered by the global financial crisis, according to Prestedge. "Because of the regulatory environment we've been in, part of that delay has been because we have simply not been able to focus on the new platform deployment - because we have consistently needed to drag resources back to do legacy application deployment," he tells silicon.com.

But the programme itself has also proved challenging, owing to the sheer size and scale of the transformation. "There is absolutely no doubt that the complexity of the programme - of replacing your entire ledgers for banking and saving in a business with 15 million consumers and 20 million accounts - has been horrifically complex," he says. "We all know that you don't change the heart in a patient without there being some challenges. But also some of the delay has unquestionably been associated with the scale of regulatory changes we've been faced with concurrently."

As well as the back-office transformation, Nationwide also kicked off a...